UK judge slams bank officials’ failure to abide by rules

It has been just over a year since the extradition hearing of Vijay Mallya kicked off at Westminster Magistrates’ Court, eight months after his arrest first on fraud-related charges and then on money laundering before Chief Magistrate Emma Arbuthnot.

Throughout the process, the hearings have been punctuated by frank comments from the judge on the state of the papers in the case, jail conditions, and what she did or didn’t give weight to over the course of lengthy hearings, including from defence witnesses who sought to question the state of jail conditions in India, or allege political pressures in the effort to prosecute him.

Earlier this year, she remarked during a discussion over the alleged conspiracy to defraud IDBI Bank, that it was “blindingly obvious” that the banks hadn’t followed their own rules in sanctioning loans to Kingfisher Airlines.

It was one of her remarks at the last hearing in September — of how the prima facie case was the most important issue for her — that suggested this would be her focus, once issues such as specific requirements relating to conditions at Barrack 12 Arthur Road prison in Mumbai had been clarified.

The 71-page-judgement published on Monday — sections of which she read out in court — was also packed with frank and critical reflections on various aspects of the case, both with respect to Mallya, executives within Kingfisher Airlines, banking employees — and even the evidence from India.

Mallya himself was described as a “glamorous, flashy, famous, bejewelled, bodyguarded, ostensibly billionaire playboy,” who potentially “charmed and cajoled” bankers into losing their common sense.

She is also highly critical of the way in which Mallya was doing “everything he could by using honest or dishonest means to keep the company going,” and once loans were granted was “not above playing ‘round robin’ as he himself described, to keep the company afloat.” “The perilous position of the company,” was well known to Mallya and others even at the time of the first loan, as the presented a different picture to the banks.

She also notes in a section relating to what he knew around the representations made to IDBI that because Mallya himself did not give evidence to the court he did not explain what he knew.

In a separate section relating to jail conditions and the need for doctors to help him manage diabetes and coronary artery disease, she suggests: “A spell in custody is likely to help him cut down on alcohol,” noting that he was “far from healthy.”

She is also scathing of the role played by bank officials, and the failure to abide by the banks’ own rules and investigate the representations made by KFA in the course of obtaining loans.

“With a bit of care the worthless negative lien on the hire purchase aircraft would have been exposed,” she notes at one point. “Extradition arrangements work on the basis of trust and any failure to abide by the assurances would doubtlessly affect the trust between this court and the GOI.”

While she says there is “no evidence’ that the CBI’s Rakesh Asthana acted corruptly in the case, or that it was political motivated to assuage the “CBI’s political masters,” she does reserve some criticism for India. “There is no doubt that the state of the papers in this case doubled the work of this court,” she says of the prosecution papers submitted, which indicated the CBI and ED had “not stood back and considered” what would help this court in making its decisions. She also warned that while she had no reason to think India would want to breach the court’s trust, she expected assurances offered to the court to be adhered to. “Extradition arrangements work on the basis of trust and any failure to abide by the assurances would doubtlessly affect the trust between this court and the GOI.”

Criticism also extended to the witnesses in the case. She described the reservations around jail conditions in Arthur Road prison, expressed by one defence witness, as “weak.”

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